NEW YORK (CNNMoney.com) -- Home prices fell 6.7 percent in October, compared with a year ago, according to the S&P/Case-Shiller 10-city home-price index. It was the largest drop recorded since the index began in 1987.

It marked the 10th consecutive month of price depreciation and 23 months of decelerating returns.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert J. Shiller, chief economist at MacroMarkets, in a statement.

Case-Shiller's 20-city index fell 6.1 percent. Shiller noted that 11 of the markets in the 20-city index posted a record fall.

"This is just the beginning," said Peter Schiff, a Darien, Conn.-based investment adviser known for his bearish views of the housing market. "Pressure is there for much, much lower prices."

According to Schiff, one factor that will drive prices lower is a change in buyer psychology. "The prices that existed were completely artificial, a function of speculators who are no longer in the market," he said. "Some buyers thought they were going to get rich."

Today, however, that demand has all but disappeared. "More people want - or have - to sell," said Schiff, "because prices aren't going up, so buyers have to look at the actual cost of owning a home."

Lawrence Yun, chief economist for the National Association of Realtors and among the most optimistic of industry insiders, conceded that large inventories will mean further price declines. "Price growth during the boom was clearly unsustainable. This is the payback," he said.

But, according to Yun, the Case-Shiller index exaggerates declines because it covers many of the markets that have been hardest hit. He cites Realtors price data that show a majority of 150-plus markets recorded year-over-year price gains.

The government price index from the Office of Federal Housing Enterprise Oversight recorded year-over-year gains in 204 of 287 markets for the three months that ended Sept. 30.

Shiller agreed that the Case-Shiller 10-city and 20-city indecis are more volatile than national trends but he points out that the national index, which Case-Shiller reports quarterly, showed a 5 percent decline for the three months ended Sept. 30 compared with 12 months ago.

The rate of change has been declining since 2005," said Shiller, "and it shows no sign of letting up. It's still very much on a downward slope with no sign of a bottom."

The Case-Shiller report emerged as some economists and industry analysts are beginning to lower their expectations for housing markets, predicting a longer and deeper price slump than they had previously forecast.

"I expect home prices to continue to drift lower in 2008 - by the mid single-digits nationally, with select markets faring worse," said Mike Larson, a real estate analyst at Weiss Research. He attributes the expected decline to tighter mortgage standards, lower consumer confidence and a plunge in speculation.

Several factors are hurting markets: Large inventories have created an 11-month supply of homes for sale; a spike in foreclosures has added to the supply; and the increase in sellers of vacant homes desperate to move.

Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent.